Determinants of Interest Rate Spreads in Solomon Islands

Author/Editor: Nooman Rebei
Publication Date: June 12, 2014
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: Bank interest rate spreads in Solomon Islands are high by regional standards. This paper examines the determinants of bank interest rates including bank specific, banking sector, macroeconomic, and legal indicators. The results show that the scale of operation, overhead costs, concentration index, and some macroeconomic variables (i.e., monetary policy rates and real growth) significantly influence interest rate margins. The paper particularly focus on the influence of the banking sector structure and finds strong evidence of bank collusion.
Series: Working Paper No. 14/105
Subject(s): Bank rates | Solomon Islands | Pacific Island Countries | Commercial banks | Financial intermediation | Cross-country analysis

Publication Date: June 12, 2014
ISBN/ISSN: 9781498303651/1018-5941 Format: Paper
Stock No: WPIEA2014105 Pages: 24
US$18.00 (Academic Rate:
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